Leading the way in the Japanese market recently was Sanwa Bank's long-awaited 50 billion ($420 million) residential mortgage-backed securitization, the first of its kind from Japan. Domestic investors bought 55 percent of the issue, followed by U.K. investors who bought 40 percent, and U.S. investors who bought the rest.

"Investor reaction was extraordinarily positive, and the issue was more than three times oversubscribed," commented a banker at Sanwa International in London, which arranged the transaction along with Bear Stearns.

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